Atlantic Legal Challenges DOJ Overreach

Representing the National Association of Manufacturers, Atlantic Legal has filed an amicus brief in support of a petition for certiorari filed by the international law firm, White & Case.

The petition arises out of an ongoing federal grand jury investigation into allegations of unlawful price fixing by the manufacturers of LCD screens, many of whom are foreign corporations. The investigation is being conducted by USDOJ’s Antitrust Division, which was aware that its investigation would likely instigate private class action lawsuits. Private actions commonly are filed even before the Division proceeds with an indictment, and that has happened in this case. The civil actions have been consolidated in a multidistrict proceeding, and discovery is underway.

The discovery in the civil cases includes material from the manufacturers’ home offices, primarily in Japan, Taiwan and South Korea, including confidential and competitor-sensitive business records ordinarily maintained outside the United States and transcripts of depositions of corporate executives and other personnel who have their offices outside the United States. The grand jury subpoenaed the foreign civil discovery material which is in the possession of the U.S. law firms solely as the result of their work in the civil multidistrict proceeding. White & Case is the recipient of one such subpoena. Its client, Toshiba, has not been indicted after four years of DOJ investigation.

If those materials were still overseas, they would be beyond the reach of U.S. subpoena power, and DOJ could not obtain them through a grand jury subpoena, but would have to use the procedures applicable to foreign discovery, i.e., letters rogatory, Mutual Legal Assistance Treaties, or informal requests through diplomatic channels. The grand jury subpoena represents an attempt by DOJ to obtain documents that are inside the United States only because of the related civil litigation, circumventing the limitations on the grand jury’s subpoena powers. The subpoenas issued in this case are also inconsistent with DOJ policy, which encourages prosecutors to make ‘all reasonable attempts’ to obtain such information without issuing a subpoena.

The district court quashed the grand jury subpoenas and allowed the United States to review, but not to copy, some of the documents produced in the MDL. The district court noted that it had found no precedent to support the subpoenas and said that it was ‘dubious about establishing such precedent.’

DOJ appealed the order quashing the subpoenas to the Ninth Circuit, which reversed, and in a 2-page decision, held that it would apply its ‘per se‘ rule that a grand jury subpoena takes precedence over a civil protective order, observing:

By a chance of litigation, the documents have been moved from outside the grasp of the grand jury to within its grasp. No authority forbids the government from closing its grip on what lies within the jurisdiction of the grand jury. See 18 U.S.C. ‘ 3332.

White & Case has urged the Supreme Court to grant certiorari on the question whether a grand jury subpoena necessarily trumps a civil protective order, for three reasons:

(1) There is a three-way conflict among six circuits on the interplay of grand jury subpoenas and civil protective orders, with the Second Circuit most clearly taking a position opposite to the Ninth Circuit; the Second Circuit holds that a civil protective order is presumed to trump a grand jury subpoena;

(2) The interplay of grand jury subpoenas and civil protective orders is a crucial issue in many high-stakes business cases, in particular, and requires a uniform rule to prevent forum shopping; and

The Foundation’s amicus brief emphasized the foreign relations implications of the case, explained the importance of the doctrine of international comity, and described in detail the other avenues available to DOJ – – including two treaties between the U.S. and Japan dealing with practical legal assistance generally and with cooperation in antitrust enforcement specifically.